Business 18

Financial control is a process through which a firm periodically compares its budget to which of the following? (Select all that apply)

1.expense 2.revenues 3.costs

Needs for operating funds include Blank______.

1.making capital expenditures 2.controlling credit operations 3.acquiring needed inventory

Select all that apply Accepting credit cards can be useful to small businesses by:

1.providing the business with payment more quickly 2.providing ease of payment for customers 3.requiring repayment of loans immediately

What are the three most common reasons firms fail financially?

1.undercapitalization 2.poor control over cash flow 3.inadequate expense control

unsecured loan

A loan that doesn't require any collateral.

financial control

A process in which a firm periodically compares its actual revenues, costs, and expenses with its budget.

What form of financing takes place when the merchant accepts payment immediately from the bank and the customer agrees to repay the bank?

Credit cards

Which statements are true regarding trade credit? (Select all that apply)

It is the most widely used source of short-term funds. It is usually more convenient than bank loans. It is used by large and small businesses.

funds are typically needed to manage day to day needs of a business as well as acquiring needed inventory.

Operating

Is it more common for a firm to fail due to lack of sales or poor financial management?

Poor financial management

True or false: A budget is a tool for financial planning.

Reason: Budgets involve money.

Which statements are true about factoring accounts?

Small businesses often use it for financing in the short term. It is the accounts receivable of a firm sold for a discount. The firm that buys the accounts receivable collects the amount due.

initial public offering (IPO)

The first public offering of a corporation's stock.

The amount a business borrows and for how long depends on which of the following? (Select all that apply)

The type of business and industry it is in merchandise it purchases with the funds

What are three questions financial managers ask when considering long-term financing?

What are the organization's long-term goals and objectives? What funds do we need to achieve the firm's long-term goals and objectives? What sources of long-term funding (capital) are available, and which will best fit our needs?

secured loan

a loan backed by collateral, something valuable such as property

What is a stock?

a share of ownership in a company

The first public offering of a corporation's stock is called Blank______.

an initial public offering (IPO)

Why might loans obtained from families and friends be problematic?

because all parties may not understand cash flow

Major investments in either tangible long-term assets such as land, or intangible assets such as patents are considered to be Blank______ expenditures.

capital

Advantages of using a credit card in small business financing include that:

cards are accepted in many places they save time

During tough economic times, customers are happy when firms extend for purchases.

credit

Borrowing money the company has a legal obligation to repay is

debt financing

A financial institution or commercial bank that purchases a business' accounts receivable at a discount and then keeps what they collect is a(n) Blank______.

factor

In any business, funds come into and go out of a business. What business function acquires funds for the firm and then manages those funds on a day-to-day basis?

finance

Place the three steps in the financial planning process in order from beginning to end with the first step at the top.

forecasting the firm financial needs developing budgets establishing financial controls

Determinants of how much money a firm should borrow include:

how quickly they can generate funds using the borrowed cash. cash flow forecasts.

What inventory management procedure helps a firm to control inventory costs?

implementing a just-in-time inventory control method

Careful control of a firm's blank allows it to maintain correct levels of stock and product.

inventory

Which are forms of debt financing?

issuing bonds getting a loan from a bank

It is better to go to banks instead of family and friends for business loans because

loans from family can hurt family relationships banks can assist the business in analyzing problems

When considering - financing options a financial manager must consider the organization's financial goals and objectives.

long term

Money is considered to have a time value because Blank______.

money has more value in your possession today than at a later point in the future.

Debt financing refers to funds that

must be repaid

Dimitri owns stock in a U.S. publicly traded company. As a stockholder, Dimitri is a(n) Blank______ of the corporation.

owner

Stockholders are the blank of a public corporation.

owners

Advantages of using a credit card in small business financing include that it Blank______. (Select all that apply)

provides a line of credit saves time and is convenient

A firm that puts something of value, like a piece of property, up for collateral is applying for a(n) loan

secured

A loan backed by collateral, something valuable like property, is called a secured loan.

secured loan

Small business managers are more concerned with Blank______ funds.

short

In factoring, the discount given depends on

the nature of the business the condition of the economy

trade credit

the practice of buying goods and services now and paying for them later

factoring

the process of selling accounts receivable for cash

leverage

the use of borrowed money to supplement existing funds for purposes of investment

The blank value of money is the idea that money in your possession today is worth more than money that will be in your possession in the future.

time

The practice of buying goods and services now and paying for them later is termed

trade credit

Short-term forecasts generally cover up to a

year